The survey, which interviewed nearly 10,000 non-retired UK adults aged over 45 – 1,000 of whom are planning to retire this year, found that many appear to be willing to take a hit on their annual retirement income in exchange for giving up work early.
The average expected retirement income for people retiring early is £16,800 ($23,766, €21,278), compared with £19,000 for those who are not planning to do so.
Regionally, London has the highest proportion of people retiring early this year, with more than two thirds planning to do so.
Final salary schemes
Unsurprisingly, more than half of this year’s early retirees have the majority of their retirement savings in a final salary scheme – compared with only 38% of those who aren’t planning to retire early.
Furthermore, the data shows that early retirees are far more likely to have a saved into a pension with only 10% admitting that they have no pension savings, compared with 20% of those who aren’t retiring early.
Better informed
Interestingly, the survey found that those looking to retire this year have consulted a professional financial adviser more recently – on average two years and nine months ago.
As a result, early retirees are better informed on recent pension changes such as the new flat rate state pension which will come into effect next month. Nearly a third have changed their retirement plans based on changes to pension rules.
Vince Smith-Hughes, a retirement income expert at Prudential, said: “We’re seeing expected retirement incomes take a long time to recover to their pre-financial crisis levels, so it is striking to see that many people retiring this year are stopping work early.
“We hear a lot about future generations having to work until they drop, which is of course a little over the top. But as fewer people over time benefit from generous final salary pensions, it will mean that anyone looking to retire early needs to prepare well in advance.”
Working longer?
In stark contrast to Prudential’s findings, a report published by Aviva yesterday found that a third of people aged over 50 who are employed in the private sector are now planning to retire later than they had previously hoped.
The Working Lives report, which consulted over 1,000 private sector employers and 4,000 private sector employees, revealed that more than one in three admitted they would be retiring later than they thought – by an average of eight years.
Among those who will now retire later than hoped, the research found that over a half gave a lack of pension savings as the primary reason for postponing their retirement plans.
The second most common reason for working longer was the amount that would be available through the state pension, with affordability being a major cause for concern for a high proportion of over-50s.
Andy Briggs, chief executive of Aviva UK Life, said: “Whether we like it or not, all the evidence points to the fact that most of us are going to be working for longer than the previous generation did and businesses need to be prepared for that.
“The report highlights that a lack of pension savings is the main driver for people staying in employment rather than retiring.”
